Question 1: Why do you mean by capital budgeting analysis so significant to the firm?
Question 2: Describe the intuition behind the NPV capital budgeting frame-work?
Question 3: Describe what is meant by the term incremental cash flows of the capital project.
Question 4: What makes the APV capital budgeting framework helpful for analyzing the foreign capital expenditures?
Question 5: Relate to the concept of lost sales to the definition of the incremental cash flows.
Question 6: What problems can enter to the capital budgeting analysis if project debt is computed rather than the borrowing capacity made by the project?
Question 7: Illustrate the nature of a concessionary loan and how is it handled in the APV model?
Question 8: Explain the intuition of discounting the different cash flows in the APV model at specific discount rates?
Question 9: In Modigliani-Miller equation, why is the market value of the levered firm more than the market value of an equal unlevered firm?
Question 10: Describe the difference between functioning the capital budgeting analysis from the parent firm’s viewpoint as opposed to the project viewpoint.
Question 11: State the concept of a real option. Describe some of the different real options a firm can be confronted with when investing in the real projects.